12-4208-cv Lnylawyer.nylj.com/adgifs/decisions14/102214douglas.pdf · Since the District Court has entered a final Judgment in the underlying litigation, this Court has jurisdiction

12-4208-cv(L), 12-4348-cv(XAP), 12-4624-cv(XAP)

United States Court of Appeals for the

Second Circuit

JAMES R. HOLLON,

Plaintiff-Appellee-Cross-Appellant,

SHIRLEY BOLES,

Plaintiff,

– v. –

MERCK & CO., INC.,

Defendant-Appellant-Cross-Appellee,

– v. –

GARY J. DOUGLAS,

Appellant. _______________________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

FINAL BRIEF FOR APPELLANT GARY J. DOUGLAS

LAW OFFICES OF MICHAEL S. ROSS

Attorneys for Appellant Gary J. Douglas

60 East 42nd Street, 47th Floor New York, New York 10165 (212) 505-4060

Case 12-4208, Document 136, 08/06/2013, 1009377, Page 1 of 69

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

STATEMENT OF JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW. . . . . . . . . . . . . . . 2

STANDARD OF REVIEW.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

A. Douglas’ Professional Background. . . . . . . . . . . . . . . . . . . . . . . . . . . 6

B. Douglas’ Agreement To Participate On A Pro Bono Basis In TheFirst Boles v. Merck Trial Before The District Court. . . . . . . . . . . . 11

C. An Overview Of The Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

D. Douglas’ Summation Comments Which The Court Interpreted AsInjecting The Off-Limits Issue Of Punitive Damages Into TheTrial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1. The Procedural Posture Of The Order To Show CauseWhich Resulted In Douglas Explaining His SummationComments To The District Court. . . . . . . . . . . . . . . . . . . . . . . 17

2. Douglas’ Credible Explanation Of His SummationComments With Respect To Point 5 Of The Order ToShow Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

a. Douglas’ Summation Comments Were Intended ToRebut Merck’s “Medication Choice” Arguments. . . . . 20

b. Douglas’ Comments At Tr. 1664:1-7. . . . . . . . . . . . . . 24


c. Douglas’ Comments At Tr. 1674:7-10. . . . . . . . . . . . . 25

d. Douglas’ Comments At Tr. 1678:7-11 And 1683-84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

e. Douglas’ Comments At Tr. 1710-11. . . . . . . . . . . . . . . 28

f. Douglas’ Explanation Of His Summation CommentsWith Respect To The Issue of Punitive DamagesWas Confirmed By The Expert Declaration ofRichard Godosky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

E. The District Court’s Issuance Of Its October 4, 2010 Opinion AndOrder Relating To The Order To Show Cause. . . . . . . . . . . . . . . . . . 32

SUMMARY OF ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

ARGUMENT: THE SANCTION ORDER SHOULD BE REVERSEDBECAUSE THE DISTRICT COURT ABUSED ITS DISCRETION INIMPOSING A SANCTION UPON DOUGLAS. . . . . . . . . . . . . . . . . . . . . 35

A. Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

B. The Legal Principles Governing The District Court’s Order.. . . . . . 37

C. The District Court’s Sanction Of Douglas Based Upon HisSummation Remarks Was An Abuse Of The District Court’sDiscretion Because The Sanction Was Not Based On ClearEvidence, Supported By A High Degree Of Specificity In FactualFindings, That Douglas’ Summation Remarks Were EntirelyWithout Color Or Motivated By An Improper Purpose.. . . . . . . . . . 41

1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ii


2. With Respect To Douglas’ Summation Remarks On Tr.1663-64, 1674, 1678 And 1683-84, The Sanction OrderFailed To Address Or Acknowledge Douglas’ ProfferedExplanations Concerning His Good-Faith Purpose ForThose Remarks, And The District Court’s Conclusion ThatThose Remarks Must Have Related To Punitive DamagesMerely Because They Did Not Relate to CompensatoryDamages Was Fundamentally Flawed And UnsupportedBy Factual Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

3. With Respect To Douglas’ Summation Remarks On Tr.1704, The District Court’s Erroneous Conclusion ThatDouglas’ Use Of The Words “Reprehensible” And“Disgusting” Must Have Been Asking The Jury ForPunitive Damages Was An Ipse Dixit Conclusion WhichWas Unsupported By Any Analysis Or Factual Findings. . . . 50

4. With Respect To Douglas’ Summation Remarks On Tr.1710-11 Relating To Saying “No” To Merck, The SanctionOrder Again Failed To Address Or Acknowledge Douglas’Proffered Explanations Concerning His Good-FaithPurpose For Those Remarks, And The District Court’sConclusion That Those Remarks Must Have Been DirectedTo Punitive Damages Was An Ipse Dixit ConclusionWhich Was Unsupported By Factual Findings.. . . . . . . . . . . 53

5. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

D. Although This Is An Appeal Of A Sanction, The ConsequencesOf The Sanction Reach Far Beyond The $2,500 Sanction Itself. . . . 60

CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

iii


TABLE OF AUTHORITIES

PAGE

CASES

Advanced Magnetic Closures, Inc. v. Jaroslawicz,607 F.3d 817 (Fed. Cir. 2010).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Agee v. Paramount Communications, Inc.,114 F.3d 395 (2d Cir. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Amaprop Limited v. Indiabulls Financial Services Limited,2012 U.S. App. 10586 (2d Cir. May 25, 2012). . . . . . . . . . . . . . . . . . . . . . 39

ATSI Communications, Inc. v. Shaar Fund,579 F.3d 143 (2d Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 38-39

Comuso v. National Railroad Passenger Corp.,267 F.3d 331 (3d Cir. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Cooter & Gell v. Hartmarx Corp.,496 U.S. 384 (1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DLC Mgmt. Corp. v. Town of Hyde Park,163 F.3d 124 (2d Cir. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Enmon v. Prospect Capital Corp.,675 F.3d 138 (2d Cir. 2012). . . . . . . . . . . . . . . . . . . . . . . 3, 33, 37, 38, 39, 40

Gollomp v. Spitzer,568 F.3d 355 (2d Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Keach v. County of Schenectady,593 F.3d 218 (2d Cir. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

iv


Mackler Productions, Inc. v. Cohen,225 F.3d 136 (2d Cir. 2000) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Martens v. Thomann,273 F.3d 159 (2d Cir. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Oliveri v. Thompson,803 F.2d 1265 (2d Cir. 1986). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Perez v. Danbury Hosp.,347 F.3d 419, 423 (2d Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 38-39

Perry v. Ethan Allen, Inc.,115 F.3d 143 (2d Cir. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Raishevich v. Foster,247 F.3d 337 (2d Cir. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Revson v. Cinque & Cinque, P.C.,221 F.3d 71 (2d Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 37, 38, 39, 40

Schlaifer Nance & Co., Inc. v. Estate of Warhol,194 F.3d 323 (2d Cir. 1999). . . . . . . . . . . . . . . . . . . . . . 36, 37-38, 39, 40, 59

Truong v. Nguyen,2012 U.S. App. LEXIS 23827 (2d Cir. Nov. 20, 2012). . . . . . . . . . . . . 38, 39

United States v. Ensign,491 F.3d 1109 (9th Cir. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

United States v. Pujana-Mena,949 F.2d 24 (2d Cir. 1991). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Wilson v. Citigroup, N.A.,2012 U.S. App. LEXIS 26381 (2d. Cir. Dec. 26, 2012).. . . . . . . . . . . . . 3, 39

v


Wolters Kluwer Financial Services, Inc. v. Scivantage,564 F.3d 110 (2d Cir. 2009). . . . . . . . . . . . . . . . . 3, 33, 36-37, 39-40, 48, 59

STATUTES AND RULES

28 U.S.C. § 1291. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

28 U.S.C. § 1332. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

28 U.S.C. § 1927. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

OTHER AUTHORITIES

Gerald F. Tietz, Strict Products Liability, Design Defects and Corporate Decision-Making: Greater Deterrence Through Stricter Process,38 VILL. L. REV. 1361 (1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55-56

Restatement (Second) of Torts: General Statements § 908 (1979).. . . . . . . . . . . . 22

vi


STATEMENT OF JURISDICTION

The District Court (Keenan, J.) had jurisdiction over the underlying litigation

based on diversity of citizenship pursuant to 28 U.S.C. § 1332, and over the sanction

proceeding as an issue collateral to the underlying action under Cooter & Gell v.

Hartmarx Corp., 496 U.S. 384, 385 (1990).

On October 4, 2010, the District Court issued an Opinion and Order (the

“Sanction Order”) imposing a $2,500 sanction upon Appellant Gary J. Douglas, Esq.,

former counsel for plaintiff in the underlying litigation, Boles v. Merck & Co., Inc.,

06 Civ. 9455 (JFK) (“Boles v. Merck”). (SPA 82-99) On October 18, 2010, Douglas

filed a Notice of Appeal from the Sanction Order. (A 1193) By Summary Order and

Judgment dated January 23, 2012, this Court dismissed Douglas’ appeal, holding that

this Court did not have appellate jurisdiction over the Sanction Order. (A 1221-24)

On September 27, 2012, the District Court entered a Judgment in the

underlying action, noting that the parties to that action had reached a Stipulation as

to the Amount of Plaintiff’s Damages, which was filed under seal. (SPA 154) On

October 25, 2012, Douglas filed a timely Notice of Appeal from the final Judgment

in the underlying action, and from the Sanction Order, which imposed sanctions

against Douglas in connection with “Point 5” of the July 7, 2010 Order to Show

Cause. (A 1231)

1


Since the District Court has entered a final Judgment in the underlying

litigation, this Court has jurisdiction over Douglas’ appeal pursuant to 28 U.S.C. §

1291. As this Court observed in its January 23, 2012 Summary Order, “[w]henever

and however a judgment is entered, ‘an attorney may appeal a decision where the

district court imposes a tangible sanction or makes an express finding that a lawyer

has committed specific acts of professional misconduct.’” (A 1224, quoting Keach

v. County of Schenectady, 593 F.3d 218, 226 [2d Cir. 2010].)

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

1. Whether the District Court abused its discretion in imposing sanctions

against Douglas based upon its view that Douglas had sought to inject the issue of

punitive damages into the case, contrary to the court’s pre-trial ruling that punitive

damages could not be awarded in the case, by making comments in his summation

which did not mention the subject of punitive damages but which the District Court

felt were not relevant, and therefore, supposedly, could only have been mentioned by

Douglas for the purpose of arguing punitive damages.

2. Whether the District Court abused its discretion in rejecting Douglas’

proffered explanations, which were clearly reasonable and credible on their face, for

why his summation comments were relevant to trial issues having nothing to do with

punitive damages.

2


3. Whether the District Court abused its discretion by imposing a sanction

upon Douglas based on the court’s intuition that Douglas’ summation arguments were

not directed to legitimate trial issues, but rather to the off-limits issue of punitive

damages, when the District Court had no clear evidence that Douglas’ summation

arguments were made in bad faith and were entirely without color.

STANDARD OF REVIEW

The imposition of sanctions is reviewed for abuse of discretion. See Wilson

v. Citigroup, N.A., 2012 U.S. Dist App. LEXIS 26381, at *8 (2d. Cir. Dec. 26, 2012);

Enmon v. Prospect Capital Corp., 675 F.3d 138, 143 (2d Cir. 2012); Wolters Kluwer

Financial Services, Inc. v. Scivantage, 564 F.3d 110, 113 (2d Cir. 2009); Revson v.

Cinque & Cinque, P.C., 221 F.3d 71, 78 (2d Cir. 2009).

3


STATEMENT OF THE CASE

Gary J. Douglas, Esq., former trial counsel for Shirley Boles, the original

plaintiff in the underlying litigation , appeals from the September 27, 2012 final1

Judgment in the underlying litigation and from the October 4, 2010 Sanction Order

in which the District Court (the Honorable John F. Keenan), imposed a $2,500

sanction upon him for certain comments which Douglas made in his summation. The

sanction was brought on by the District Court’s sua sponte Order to Show Cause,

which was issued following a jury verdict against the defendant.

On July 7, 2010, the court served Douglas with an Order to Show Cause

requiring him to explain his conduct at trial with respect to nine (9) issues, and to

show cause why he should not be sanctioned under the inherent power of the Court

to conduct its business and affairs fairly and without improper behavior by counsel.

(A 1010-13) In response to the Order to Show Cause, on Douglas submitted a 68-

page Declaration (A 1014-81), dated August 16, 2010, with exhibits (A 1082-1155),

addressing the nine (9) issues referenced in the Order to Show Cause. Eventually, the

District Court, in its October 4 Sanction Order (SPA 82-99) addressed to the Orderth

Plaintiff Boles died on September 4, 2011. (A 1225-26) James R. Hollon,1

Personal Representative of plaintiff Boles’ estate, was substituted as plaintiff onSeptember 6, 2012. (A 1229)

4


to Show Cause, declined to impose any sanction except as to “Point 5” of the Order

to Show Cause, which read as follows:

“injecting the issue of punitive damages into the trial – despite the fact that the Court had already dismissed thepunitive aspect of the case on summary judgment – byarguing that Plaintiff should receive a damages award ‘tosay something to Merck’ (Aug. 5, 2009 Op. & Order at 41;Trial Tr. at 1664:3-7, 1674:8-10, 1678:7-11, 1683-84,1704:10-13, 1710-11).”

(A 1011-12)

The October 4 Sanction Order imposed a $2,500 sanction upon Douglas. th

(SPA 98-99) On October 18, 2010, Douglas paid the sanction and filed a timely

Notice of Appeal from the imposition of the sanction. (A 1193) This Court

dismissed Douglas’ appeal for lack of appellate jurisdiction on January 23, 2012. (A

1221-24)

On September 27, 2012, the District Court entered a final Judgment in the

underlying action (SPA 154), and Douglas timely filed a Notice of Appeal from that

Judgment and from the District Court’s Sanction Order. (A 1231)

5


STATEMENT OF FACTS

A. Douglas’ Professional Background.

This sanctions case turns on whether or not Douglas would wilfully engage in

litigation misconduct, including the notion that he would wilfully make an argument

on a subject which had been ruled off-limits by the District Court. Accordingly, it is

appropriate to consider the evidence before the District Court which is completely

inconsistent with such a view of Douglas. In short, the evidence before the District2

Court established that Douglas has been committed to the principle of following

judges’ instructions in courtrooms – a principle which flies in the face of a finding

that Douglas wilfully disobeyed the District Court’s ruling concerning the off-limits

nature of punitive damages in the case.

Douglas is 55 years old and is a graduate of the State University of New York

at Albany. He attended and graduated from the Jacob D. Fuchsberg Law Center of

Touro College in 1987. Law was a second career for Douglas; prior to law school,

This Court has ruled that character evidence is admissible to show that2

because of his or her good reputation, a criminal defendant is less likely to havecommitted the charged crime; and in cases where a defendant testifies, characterevidence may also be used by the jury to help it determine whether the defendant wastruthful on the stand. See United States v. Pujana-Mena, 949 F.2d 24 (2d Cir. 1991). Surely, if character evidence may negate guilt in criminal cases where the standardof proof is “beyond a reasonable doubt,” it is equally capable of negating guilt in asanctions case where the question is whether a lawyer possessed a “wrongful” stateof mind – the very issued presented on this appeal.

6


he worked for his father for nearly a decade in the retail pharmacy business. While

working in pharmacies, Douglas saw first-hand numerous individuals who had been

injured as the result of the negligence and lack of care of others. He became

determined to become a lawyer and represent injured plaintiffs. At the age of 27, he

began attending law school; and when he graduated in 1987, he joined the highly

regarded Wall Street defense law firm of Leahey & Johnson, where he learned his

trial skills. (A 1015-16)

After three years of defense work, Douglas began working at a mid-size

plaintiff’s firm, Pasternack Popish & Reiff, prosecuting negligence and medical

malpractice cases. He then became a partner and senior trial attorney at another

plaintiff’s firm, Finz & Finz, where he was introduced to mass torts, including

tobacco and pharmaceutical product liability cases. Douglas’ mentor and then-

partner, Leonard Finz, Esq., was a retired New York State Supreme Court Justice who

obtained the first plaintiff’s verdict in a DES (diethylstilbestrol)/birth defect mass tort

case in the nation. Eventually, in 2002, Douglas opened his own law firm. In the

nearly eleven years which have followed, Douglas and his partner, Michael London,

Esq., have seen their firm grow to 10 lawyers and 20 support staff. The work of

Douglas & London, P.C., is focused on prosecution of pharmaceutical mass torts, as

well as medical malpractice and, to a lesser extent, personal injury cases. (A 1016)

7


During the last 23 years, Douglas has tried more than 200 cases, with at least

50 having gone to full verdict, and the remainder having settled during trial. Douglas

has appeared before hundreds of judges in the last two decades, and never once has

he been the subject of a contempt finding; nor has he ever before been sanctioned by

any state or federal judge. Douglas has earned the confidence of many respected

federal and state judges, who understand that while his style may, at times, be

demonstrative or dramatic, it is effective and within the bounds of the law and

accepted advocacy. (A 1016-17) In addition, lawyers who have seen Douglas in

courtrooms over the last two decades can attest to the fact that Douglas is a zealous,

but ethical and respectful, lawyer. (A 1017-19)

In support of his Declaration in response to the Order to Show Cause, Douglas

submitted, as Exhibit A, fourteen (14) letters from respected plaintiff’s and defense

attorneys who have tried cases against Douglas or have been co-counsel with him

over the years. (A 1082-1107) Those letters demonstrate that Douglas’ conduct as

an attorney in courtrooms throughout the State has consistently reflected a deep and

abiding respect for the trial process and for the rule of law. Douglas’ colleagues –

including his adversaries – have described him as “ethical,” “honest,” “respectful of

the legal system,” and have observed, for example, that “he is devoted to his clients

and determined and dynamic in the courtroom, but for him to engage in improper

8


conduct is simply contrary to everything I know about Mr. Douglas.” (A 1017-19,

n.1)

The District Court had to acknowledge that the letters submitted by Douglas’

adversaries are “impressive.” (A 1180) One of those letters was written by Harold

K. Gordon, Esq., a partner in the Jones Day firm, and a highly regarded defense

attorney who has faced off against Douglas in the courtroom over the years:

“Gary has been opposing counsel in a number of cases inwhich I have served as defense counsel, including onematter which culminated in an eight-week jury trial. Through these matters, I formed the view that Gary is anoutstanding attorney, especially in a trial setting. I believehe consistently employs hard work and diligence in thepreparation of his clients’ cases and zealous, skillful andethical advocacy in matters in which he has been retained. He has, in my view, pursued his cases within the bounds ofthe law at all times. Having discussed Gary’s practices asan attorney with other plaintiffs’ attorneys and defensecounsel, I believe Gary’s reputation in the legal communityis that he consistently reflects these traits in the eyes offellow attorneys and in the view of judges before whom heappears.”

(A 1089-90; see also letter of defense counsel Mark Yagerman, Esq. [A 1106-07]

[recognizing Douglas as an “honest and ethical lawyer whose courtroom conduct and

out of court conduct was proper and respectful of the legal system”].)

Douglas has tried and won many important verdicts that have established

liability and damages against corporations that have injured the public. Most of

9


Douglas’ cases involve complex questions of liability, causation, scientific evidence,

etc.; and he is typically opposed by extraordinarily experienced and well-financed

defense counsel. (A 1019)

In addition to Douglas’ work as an advocate in the courtroom, he has worked

to establish better ties between the Bench and the Bar and has worked quietly, over

many years and hundreds of hours, to improve the courts. Douglas currently serves

on the Board of Directors of the New York State Trial Lawyers Association. He has

personally supported legislative proposals that impact the Bar and provide for a more

efficient processing of civil claims by revising the court rules which govern the

practices of lawyers and judges in individual counties. (A 1019)

Members of Douglas’ firm have served as court-appointed lead, co-lead and

federal liaison counsel in several national mass tort and class action multi-district

litigations (“MDLs”) – many of which have been among the largest in recent years.

(A 1020) In addition to these distinguished leadership positions, members of

Douglas’ firm have also served on Plaintiffs’ Steering Committees in at least seven

national MDLs and one additional New York State nationally-consolidated case. (A

1020-21)

In short, the evidence before the District Court established that Douglas has

been committed to the principle of following judges’ instructions in courtrooms – a

10


principle which flies in the face of a finding that Douglas wilfully disobeyed the

District Court’s ruling concerning the off-limits nature of punitive damages in the

case.

B. Douglas’ Agreement To Participate On A Pro Bono Basis InThe First Boles v. Merck Trial Before The District Court.

In the summer of 2009, Douglas was contacted by Timothy O’Brien, Esq., of

the Pensacola, Florida law firm of Levin, Papantonio, Thomas, Mitchell, Echsner,

Rafferty & Proctor, P.A., to consult with them concerning issues of jury selection

strategy in Boles v. Merck, which would be the first trial in the country involving

claims by a victim of Fosamax against its manufacturer, Merck & Co., Inc. O’Brien

consulted with Douglas based upon Douglas’ reputation in the national plaintiff’s bar,

his experience, and his knowledge of New York juror demographics, having selected

literally hundreds of juries in various New York counties over the past two decades.

Douglas’ involvement in the case at that point was limited to one-and-a-half days of

assisting O’Brien and his colleagues in jury selection, including the day he spent in

court with O’Brien, who tried the case. (A 1022)

Boles v. Merck was first tried in August and September 2009 and ended in a

mistrial after the jury could not reach a unanimous decision. (SPA 103) Prior to the

re-trial, O’Brien asked Douglas to join the trial team that would eventually retry the

11


case. (A 1022) Douglas agreed to assist O’Brien and plaintiff Boles free of charge

and without any expectation of compensation. Although Douglas’ staff and Douglas

committed hundreds of hours to trial preparation, Douglas was and is to receive no

compensation in the case; nor did he receive any compensation for his involvement

in the first Boles v. Merck trial. (A 1023, 1148, 1181-82)

C. An Overview Of The Trial.

The second Boles v. Merck trial – i.e., the trial which resulted in the imposition

of a sanction upon Douglas (hereinafter referred to as “the trial” or “re-trial”) – was

vigorously litigated by both sides (A 1150) with O’Brien and Douglas representing

plaintiff Boles, and a team of lawyers from Hughes Hubbard & Reed, LLP and

Venable, LLP representing Merck. The case had been selected as a “bellwether” case

in the MDL concerning defendant Merck’s prescription drug Fosamax. (SPA 100)

The re-trial culminated with an $8 million plaintiff’s verdict, which the District Court

ultimately found excessive, and sua sponte ordered a remittitur. (SPA 101)

The District Court’s October 4, 2010 Opinion and Order as to post-trial

motions by the defense (SPA 100-52) describes the various issues presented at trial.

The trial issues included the question of whether Fosamax, which belonged to a class

of drugs called bisphosphonates and which was used to treat and prevent

osteoporosis, was safe. The primary effect of Fosamax is the inhibition of bone

12


resorption, which in turn decreases bone formation. (SPA 101) Since 2003, there had

been various published reports of bisphosphonate users developing a rare condition

called osteonecrosis of the jaw (i.e., chronic bone loss in the jaw; “ONJ”). (SPA 102)

Plaintiff Boles, who was a 72-year-old Florida resident, maintained that she

developed bisphosphonate-related ONJ as a result of taking Fosamax for several

years. (SPA 102, 105-07) Plaintiff Boles’ medical records showed that her condition

deteriorated to the point where she had exposed necrotic (i.e., dead) jaw bone in her

mouth, and that she developed three skin fistulas under her chin (openings in the skin

from which pus and other purulent liquids intermittently drain). (SPA 105) Because

her dead jaw bone extended to a nerve area affecting her lower lip, she required

treatment with narcotic pain medication; she had lost nearly 40 pounds since the onset

of her condition; and, if she had not passed away in September 2011, she would have

required an amputation and surgical reconstruction of the dead bone in her jaw. (SPA

105-06; A 432, 441-42 [Tr. 1674, 1708-11])3

Plaintiff filed a complaint against Merck though her counsel, O’Brien, alleging

claims of strict liability and negligence rooted in theories of failure to warn and

design defect. During the first trial, the District Court dismissed plaintiff’s claims of

References herein to “Tr.” followed by a number refer to pages of the3

transcript of the re-trial in Boles v. Merck.

13


intentional misrepresentation and concealment of risk. After the first trial, the court

dismissed the failure to warn claims. The case was re-tried on the negligent design

and strict liability design defect claims. (SPA 102-04)

Plaintiff’s position during trial was that “the risk of ONJ vastly outweighed the

complete lack of benefit to patients like Boles....” (SPA 110-11) As part of

plaintiff’s case, an expert, Dr. Curt Furberg, was called to establish that although

statistical studies conducted by Merck and reviewed by the Federal Drug

Administration (“FDA”) showed that Fosamax has benefits for preventing and

reducing bone fractures in a segment of the population, there was no evidence that

Fosamax provided such benefits for users who, like plaintiff Boles, were considered

to be “osteopenic” (a condition where an individual has low bone mass, is considered

to be “only at risk” of developing osteoporosis and whose standardized bone density

“T-score” is between -1.5 and -2.5). (SPA 102, 105; see SPA 107-09.) Dr. Furberg

further testified that Merck’s clinical trial data showed that, even for osteoporotic

patients, Fosamax has a limited timeframe within which it is effective at reducing

osteoporosis: there is no evidence of any fracture-reduction benefit after 36 months

of Fosamax use. (SPA 111)

In other words, as the District Court described it, for the group of study patients

whose condition was similar to plaintiff Boles’, “the data did not show a statistically

14


significant benefit for Fosamax use compared to a placebo: in fact, there were more

fractures in the group receiving Fosamax (92) than in the placebo group (87).” (SPA

108-09) The District Court noted that “[e]ven Merck’s expert, Dr. Bilezikian,

acknowledged the lack of solid evidence showing whether Fosamax provides fracture

reduction benefit to [plaintiff’s] specific group of patients.” (SPA 109)

Merck’s position at trial was that plaintiff’s jaw condition was caused by a

severe periodontal disease and was unrelated to her use of Fosamax. (SPA 107)

Merck’s counsel chose not to cross-examine Dr. Furberg regarding the key issue of

the limited duration of any fracture-reduction benefit to Fosamax users, and did not

call any witnesses or introduce any evidence to refute his conclusion. (SPA 110, 118)

Rather, Merck’s counsel appeared to rely on repeated references to the notion that a

plaintiff’s verdict would result in doctors having less ability to prescribe drugs of

their choice. (A 250, 421)

As the District Court found in its October 4 Opinion and Order denyingth

Merck’s motion to set aside the verdict, “The jury was free to believe Dr. Furberg and

agree with his conclusions, and thus it would be reasonable for it to find that the risk

15


of ONJ outweighs this limited period of benefit for all users. ... Merck’s argument on

the issue of whether Fosamax is unreasonably dangerous lacks merit.” (SPA 118)4

After the 13-day trial, the jury found for plaintiff on her strict liability design

defect and negligent design claims, awarding her $8 million in compensatory

damages. The verdict in favor of plaintiff Boles was the first Fosamax-related case

to result in a plaintiff’s verdict in the MDL or otherwise. (SPA 101, 150)

In addition, during trial, plaintiff introduced several “adverse event reports4

received by Merck prior to the onset of Plaintiff’s injury that detail dental and jawcomplications experienced by Fosamax users.” (SPA 123-24) Plaintiff alsointroduced evidence from a 1981 study showing that a first generationbisphosphonate induced ONJ in rats. (SPA 124) The District Court noted that“[c]onfronted with the foregoing evidence, a jury could have concluded that the riskof ONJ was reasonably foreseeable.” (Id.)

16


D. Douglas’ Summation Comments Which The CourtInterpreted As Injecting The Off-Limits Issue Of PunitiveDamages Into The Trial.

1. The Procedural Posture Of The Order To Show CauseWhich Resulted In Douglas Explaining His SummationComments To The District Court.

During the 13-day re-trial of Boles v. Merck, O’Brien and Douglas divided the

trial duties, with O’Brien handling the opening statement and the examination of most

witnesses, and Douglas examining other witnesses and delivering plaintiff’s

summation. (SPA 133)

During Douglas’ summation on June 24, 2010, defense counsel objected to

Douglas’ summation as having, supposedly, improperly raised the issue of punitive

damages. (A 441-42) The District Court overruled defense counsel’s first objection,

and in response to the second objection, indicated that it would instruct the jury as to

damages. (Id.) Following the summation, however, the court commented that, in its

view, Douglas had made improper remarks regarding punitive damages during his

summation, and that he would advise the jury in his charge the following day of the

contentions in the case. (A 442-43)

The following morning, defense counsel (from Hughes Hubbard & Reed)

delivered to the District Court a letter raising various issues with respect to Douglas’

17


conduct at trial and during his summation. (SPA 994-1004) After acknowledging5

receipt of defense counsel’s letter, the District Court directed Douglas to appear

before the court on July 7, 2010, with counsel, to be served with an Order to Show

Cause in connection with his conduct at trial. (A 445) Also, following defense

counsel’s summation, the District Court gave the jury an instruction that,

notwithstanding any arguments allegedly made by Douglas that the jury should (in

the words of the District Court – and not Douglas) “punish” Merck, damages in the

case must be based only on compensating the plaintiff. (A 450; see SPA 147.)

On July 7 , Douglas returned to the District Court, and was served with anth

Order requiring him to show cause as to why he should not be sanctioned under the

inherent power of the Court to conduct its business and affairs fairly and without

improper behavior by counsel. (A 1010-13) The Order to Show Cause required

Douglas to explain his conduct with respect to the nine (9) issues raised in the letters

sent to the District Court by defense counsel on June 25 and July 2 . “Point 5” ofth nd

Defense counsel’s June 25 letter complained about various issues beyond the5 th

punitive damages issue; and the subject of most of the complaints ultimately foundtheir way into the District Court’s Order to Show Cause. Separately, on July 2, 2010,Merck’s other defense counsel at trial (from Venable LLP) sent the District Court anadditional letter which identified various issues that it believed were relevant to theimpending service of the Order to Show Cause. (A 1005-09)

18


the Order to Show Cause – the only point as to which the court ultimately imposed

a sanction on Douglas – concerned Douglas, supposedly:

“injecting the issue of punitive damages into the trial – despite the fact that the Court had already dismissed thepunitive aspect of the case on summary judgment – byarguing that Plaintiff should receive a damages award ‘tosay something to Merck’ (Aug. 5, 2009 Op. & Order at 41;Trial Tr. at 1664:3-7, 1674:8-10, 1678:7-11, 1683-84,1704:10-13, 1710-11).”

(SPA 1011-12)

In response to the Order to Show Cause, Douglas submitted a 68-page

Declaration (plus exhibits) addressing the nine (9) matters referenced in the Order to

Show Cause. (A 1014-81) With respect to Point 5 of the Order to Show Cause,

Douglas’ Declaration provided the District Court with a credible and colorable

explanation as to why the comments in his summation were not intended to inject the

issue of punitive damages into the trial, and as to his reasonable belief at the time of

his summation that his comments were not improper. (A 1044-52)

We discuss below Douglas’ credible and colorable explanation to the court of

his summation comments in connection with Point 5 of the Order to Show Cause.

19


2. Douglas’ Credible Explanation Of His SummationComments With Respect To Point 5 Of The Order ToShow Cause.

a. Douglas’ Summation Comments Were IntendedTo Rebut Merck’s “Medication Choice”Arguments.

Douglas’ Declaration provided the District Court with credible explanation for

the comments which led the District Court to believe that he had, supposedly,

improperly injected the off-limits issue of punitive damages into the trial. (A 1044-

52) Douglas made it clear that he did not seek to inject the issue of punitive damages

into the trial. (Id.) Rather, he vigorously maintained that the comments referenced

in Point 5 of the Order to Show Cause only represented his response to defense

counsel’s repeated arguments in opening statements and summation which suggested

to the jury that a plaintiff’s verdict would result in somehow taking medication

choices away from American physicians. (A 1045-47)

Douglas recited some, but not all, of defense counsel’s statements claiming that

a plaintiff’s verdict would inhibit future doctor choices. (A 1045-47) Through this

argument, defense counsel argued to the jury that the case was about far more than

just plaintiff Boles’ injuries. Douglas believed that these claims had to be rebutted

and that his summation represented fair comment on the evidence presented. (A

20


1045-47) Douglas’ Declaration (A 1045-46) excerpted the following comments from

defense counsel’s opening statement to the jury:

• “Not all drugs work for everyone, but doctors need achoice. Doctors need a choice. Do they want to use a drugto build bone density, that builds bone for their patients? Doctors need that choice, and the FDA made sure thatdoctors got that choice for women with low bone density.” (A 250)

• “ ... What they argue is that for some women, women witha little bit better bone density, that those women, eventhough it’s FDA approved for those women to help themprevent getting bone loss, even though it’s FDA approvedfor them, even though there’s overwhelming evidence itwill prevent bone loss for them, just like it did for Mrs.Boles, what the lawyers for the plaintiff argue is thatdoctors should not be able to choose Fosamax for thosewomen. That’s what their argument is. It’s defective forthose women, so doctors for those women should not beable to choose. That’s exactly what they’re asking in thiscase. Those women and their doctors should not have thechoice. The FDA has decided those women and theirdoctors should have that choice, and that is our position inthis case, the same as the FDA’s.” (A 250)

The “choice” theme was pursued vigorously by defense counsel through the

evidence in the case, including during the cross-examination of Dr. Furberg (A 326),

the direct examination of Dr. Anne de Papp (A 371, 401), and the direct examination

of Dr. John Bilezikian (A 412-13). This “choice” argument was repeated in defense

counsel’s summation. (A 421)

21


As Douglas’ Declaration explained to the District Court, he believed it was

important that his summation vigorously respond to and rebut this “choice” argument.

(A 1045-47) Accordingly, Douglas’ summation denied that the case was about

choice – rather, Douglas told the jury that if there were a goal beyond justice for

plaintiff Boles, it was to protect women from taking drugs they do not need. (A

1045-47) As Douglas told the jury on summation:

“We – and I think it was suggested, if not outright said [bydefense counsel in his summation], that we’re trying totake away the choice of women and their doctors for theappropriate drugs for this horrible disease. Absolutely not.

If we had a goal beyond justice for Shirley Boles, ifanything, it would be to protect women from taking drugsthat they don’t need. That’s all we’re saying. If we had anagenda beyond justice for Shirley Boles.”

(A 436, see A 1046.)

Furthermore, Douglas’ Declaration explained his view that there was nothing

punitive – i.e., “punishing” – about his argument at Tr. 1711:15 (A 442) – which is15

one of the transcript pages referenced by the District Court in Point 5 of the Order to

In his Declaration, Douglas cited to the Restatement (Second) of Torts:15

General Statements § 908 (1979), which defines “Punitive Damages” as “damages,other than compensatory or nominal damages, awarded against a person to punishhim for his outrageous conduct and to deter him and others like him from similarconduct in the future.” (See A 1047, n.15.) Douglas’ Declaration argued that,clearly, punitive damages are damages, other than compensatory damages, which seekto “punish” a defendant. (Id.)

22


Show Cause – where Douglas asked the jury “to say to Merck, ‘No.’” Douglas

explained that his comments, stated another way, meant simply: Merck wanted the

jury to say “No” to plaintiff Boles’ claims; and plaintiff Boles wanted the jury to say

“No” to Merck’s defenses by finding Merck liable in the case – and there was nothing

in that sentence that asked for Merck to be punished (as alleged in Point 5 of the

Order to Show Cause). (A 1045-47)

Douglas’ Declaration reminded the District Court that his statements in which

he asked the jury to say “No” to Merck were preceded by his rebuttal of the defense’s

“choice” argument, and the District Court’s overruling of defense counsel’s objection

to Douglas’ argument at Tr:1710:13-17:

“[Douglas:] We’re not taking the choice away. We’re justsaying don’t give medication to women that shouldn’t beon it.

[Defense Counsel]: Objection, your Honor. It’scompensatory only.

The Court: Objection overruled.”

(A 441; emphasis added.)

In light of the court’s flat overruling of defense counsel’s objection, any

reasonable lawyer would have believed that further similar summation comments

which addressed similar and related issues of “choice” were proper.

23


Similarly, the other trial transcript page references cited by the District Court

in Point 5 of the Order to Show Cause were not arguments by which Douglas was

seeking to ask for or inject punitive damage issues into the case.

b. Douglas’ Comments At Tr. 1664:1-7.


explanation of his good-faith purpose for his comments at Tr. 1664:1-7 (A 430),

which were cited by the court in connection with Point 5 of the Order to Show Cause.

(A 1011-12, 1048-49) That citation in the Order to Show Cause referenced the

following comment by Douglas:

“To convince folks like Mrs. Boles, to convince folks thatthey should be frightened that unless you take this pillyou’re going to die, because 30 percent of people who havehip fractures end up dead. We heard that from Dr.Bilezikian who came here to tell you all the scary details. Whoo, everybody better get on Fosamax today.”

(A 430)

Douglas’ Declaration explained that this comment was intended to address

testimony during Merck’s case in chief (A 409-10), in which Dr. Bilezikian cited

statistics concerning 300,000 hip fractures per year which carried a 30% mortality

rate, and 30-40% of hip fracture sufferers becoming care-dependent or nursing home

dependent. Douglas was countering the message of “fear” implicit in this testimony

24


and defense counsel’s theme – fear that certain drugs would no longer be available

to patients if there were a plaintiff’s verdict. (A 1048-49)

Douglas further explained that his comment was also addressed to a similar

fear-inducing argument and choice-deprivation argument implicit in the testimony of

Dr. Bilezikian where he told the jury:

“Well, yes, it goes without saying these kinds of dataindicate that it’s a dangerous disease [i.e. osteoporosis] forwhat it can do potentially to everyone of us becauseeveryone of us in this courtroom, if we live long enoughand if we don’t do something about this disease, will be astatistic like this.”


This last piece of testimony by Dr. Bilezikian was, Douglas reasonably

believed, obviously calculated to create fear in the jury’s minds concerning what

would happen to them personally if there were a plaintiff’s verdict. As Douglas

explained to the District Court, his argument at Tr. 1664 was not asking the jury to

punish Merck, it was made for the good-faith purpose of debunking the fear

argument. (A 1048-49)

c. Douglas’ Comments At Tr. 1674:7-10.


explanation of his good-faith purpose for his comments at Tr. 1674:7-10 (A 432),

25



(A 1011-12, 1049) That citation in the Order referenced the following comment by

Douglas:

“[Plaintiff Boles] goes on Fosamax in 1997, folks, the drugthat they want to sell to women who don’t need it. That’swhat our case is about, selling drugs to women that don’tneed it.”

(A 432)

This statement – which is virtually the same statement that Douglas made at Tr.

1710:13-17 (A 441), and which was the subject of an overruled objection (p. 23,

supra) – was fair comment on the evidence in light of Merck’s theme that a plaintiff’s

verdict would take drug choices away from physicians. Given that there was no

evidence at trial of a fracture reduction benefit for people like plaintiff Boles in the

use of Fosamax, Merck’s argument that doctors needed a choice to prescribe what

was, in effect, a potentially dangerous drug that had no proven efficacy for plaintiff’s

group of patients, made no sense. And that is why Douglas argued: “That’s what our

case is about, selling drugs to women that don’t need it.” (A 432) Douglas’

argument was not asking the jury to punish Merck, it was clearly made to debunk the

fear argument. (A 1047-49)

26


d. Douglas’ Comments At Tr. 1678:7-11 And 1683-84.


explanation of his good-faith purpose for his comments at Tr. 1678:7-11 and 1683-84

(A 433, 435), which were cited by the court in connection with Point 5 of the Order

to Show Cause. (A 1011-12, 1049-50) That citation referenced Douglas’ “Flat Earth

Society” argument that Merck refused to accept what the scientific and medical

community have accepted for years – namely, that there is an association between

Fosamax and ONJ. (A 433, 435, 1049-50)

Douglas’ statements represented fair comment with respect to the motive of a

company like Merck to claim that something it sells is beneficial for a population for

which there is no evidence of meaningful benefit. Merck had a motive to deny that

Fosamax causes ONJ because it was selling the drug at a profit to a very large

population of women. Douglas’ argument concerning the Flat Earth Society was not

directed at punitive damages; it was directed at demonstrating Merck’s lack of

credibility and to underscore Merck’s bias and motive in denying the association

between Fosamax and ONJ. Douglas was arguing that Merck was, literally, the only

one in the world denying the cause and effect issue because they were selling

Fosamax at a profit. (A 1049-50)

27


Accordingly, when Douglas told the jury to “say no, don’t buy it” (A 442), he

was not asking the jury to punish Merck; rather, he was asking the jury to reject

Merck’s arguments. (A 1049-50)

e. Douglas’ Comments At Tr. 1710-11.


explanation of his good-faith purpose for his comments at Tr. 1710-11 (A 441-42),


(A 1011-12, 1051-52) That portion of the transcript reflects a number of comments

which Douglas made and which he strongly believes were fair comment on the

evidence. (A 1051-52)

Douglas’ statements on Tr. 1710-11 are preceded by comments which are

clearly aimed at compensatory damages, not punitive damages. On Tr. 1708:19,

Douglas began his presentation of this issue:

“... I’m going to talk to you about damages. I have a fewminutes left. That’s lawyer talk for injuries and whathappened to Mrs. Boles as a result of all of this. We knowthat she suffered. ... You’re going to be asked differentquestions and you are going to be asked if you find in ourfavor to award a sum of money to compensate Mrs. Bolesfor the incredible pain and suffering that she’s experiencedand lived through.”


28


This language framed the issue of damages in the case as clearly one of

compensation, and not punishment. (A 1051-52)

As discussed above (pp. 23, supra), at Tr. 1710:13-14, Douglas again argued

that “[w]e’re not taking the choice [of doctors to prescribe drugs] away. We’re just

saying don’t give medicine to women that shouldn’t be on it.” (A 441) When

defense counsel objected to this argument by Douglas by saying, “It’s compensatory

only,” the District Court overruled counsel’s objection. (A 441) Douglas reasonably

believed that implicit in the District Court’s ruling was the fact that the court did not

view his arguments as asking the jury to impose punitive damages (A 1051-52) – and

he was certainly not on notice that any future similar comments would be improper.16

Thereafter, beginning on Tr. 1710:18 (A 441), Douglas discussed plaintiff

Boles’ background and her losses due to Fosamax and how it impacted her life; and,

The record demonstrates that, during the trial, Douglas never openly16

disregarded any instruction or warning from the District Court concerning anysupposedly offensive or improper conduct by him. Indeed, when advised by theDistrict Court during a court recess that it did not like his sarcastic use of the word“magnanimous” on two occasions during his cross-examination of Dr. RobertGlickman (A 405), the one witness Douglas cross-examined during the entire trial,Douglas adhered to the District Court’s caution and thereafter softened hisexamination of that expert witness. (A 1078-79) Stated another way, on the oneoccasion when he was given notice of conduct which the District Court believed wasimproper, Douglas conformed his conduct going forward. (Id.)

29


later, Douglas specifically asked the jury to base their damages award on

compensating plaintiff Boles for her injuries and loss of enjoyment of life:

“How much is that worth, folks, that you can’t havepleasure in your golden years to enjoy affection with yourgrandson, because you’re afraid that he will harm you [byhis touching plaintiff Boles’ fragile jaw]. Not even worriedabout her pain, how bad will he [the grandson] feel oneday. I’m going to ask you to award an amount of moneyproportional to that [i.e. her injuries and her loss ofenjoyment of life].”

(A 442)

At this point, Douglas asked the jury to compensate plaintiff Boles for that loss

(and not punitive damages):

“I’m going to suggest an amount. You can say, Douglas,you’re crazy, that’s way too much, or Douglas, you’recrazy, it’s way too low. It’s up to you. You have thepower.”

(A 442)

Thus, Douglas’ statements in his summation as reflected on Tr. 1710-11 did not

seek to inject the issue of punitive damages into the trial – and, on the contrary, made

it clear that he was asking the jury to award damages based only upon compensating

plaintiff Boles.

30


f. Douglas’ Explanation Of His SummationComments With Respect To The Issue of PunitiveDamages Was Confirmed By The ExpertDeclaration of Richard Godosky.

In support of Douglas’ explanation with respect to the issue of punitive

damages, Richard Godosky, Esq., one of New York’s (and perhaps the nation’s) most

respected trial attorneys, submitted an expert Declaration. (A 1118-35) Godosky’s

qualifications are set forth on pages 1 through 3 of his Declaration (A 1119-21) and,

to be sure, he is considered one of the Bar’s elder statespersons. Godosky has no

personal or professional relationship with Douglas. (A 1121)

Godosky reviewed the entire 1,700 page transcript of the of the re-trial (A

1121) and concluded with a reasonable degree of professional certainty that Douglas’

conduct at trial in general was proper, and with respect to the specific issue of

punitive damages: 1) Douglas’ comments would reasonably have been understood

by the jury (and intended by Douglas) to have been directed not to the issue of

punitive damages, but, rather, to the issue of liability and to have been made in

response to arguments by the defense; and 2) lawyers in the New York trial

community would not have believed that Douglas’ summation comments improperly

injected the issue of punitive damages into the trial. (A 1121-23, 1126) Godosky

observed quite emphatically:

31


“There is not a single request or intimation by Mr. Douglasthat he was seeking punitive damages, but rather, Mr.Douglas was asking the jury to hold the defendantresponsible in this case and perhaps protect futureconsumers of Fosamax.”

(A 1126)

* * *

In sum, Douglas’ August 16 Declaration in response to the Order to Showth

Cause provided a credible explanation for his summation comments with respect to

the District Court’s concern that Douglas may have injected the off-limits issue of

punitive damages into the trial.

E. The District Court’s Issuance Of Its October 4, 2010 OpinionAnd Order Relating To The Order To Show Cause.

After Douglas submitted his August 16 Declaration, he appeared before theth

District Court for oral argument on the matter on September 9, 2010. During the

course of the oral argument, the Court invited further briefing with respect to Point

1 of the Order to Show Cause. (A 1173) Douglas’ counsel submitted a letter

addressing Point 1 on September 20, 2010. (A 1184-92) Thereafter, on October 4,

2010, the Court issued its Sanction Order imposing a $2,500 sanction upon Douglas,

but declining to refer the matter to the District Court’s Grievance Committee. (SPA

82-99) The sanction was paid to the District Court and a timely Notice of Appeal was

32


filed on October 18, 2010. (A 1193) This Court dismissed that appeal for lack of

appellate jurisdiction on January 23, 2012. (A 1221-24) On September 27, 2012, the

District Court entered a final Judgment in the underlying action. (SPA 154) Douglas

then filed a timely Notice of Appeal from the final Judgment and from the Sanction

Order on October 25, 2012. (A 1231) This appeal follows.

SUMMARY OF ARGUMENT

The District Court abused its discretion in imposing a sanction based upon

Douglas’ supposed violation of the Court’s directive not to inject the issue of punitive

damages into the case. Douglas never overtly argued or even mentioned the issue of

punitive damages in his summation, and his August 16 Declaration provided ath

credible and colorable explanation for why his summation comments were relevant

to trial issues which had nothing to do with punitive damages.

Furthermore, the Sanction Order failed to satisfy this Court’s standard for the

imposition of sanctions. Specifically, District Court did not, as is required by the

standards articulated by this Court in Wolters Kluwer Financial Services, Inc. v.

Scivantage, 564 F.3d 110, 113-14 (2d Cir. 2009), make findings that Douglas acted

without color or with an improper purpose supported by “a high degree of specificity

in the factual findings.” See also Enmon v. Prospect Capital Corp., 675 F.3d 138,

143 (2d Cir. 2012) (same).

33


Specifically, Douglas’ summation comments which the District Court found to

be improper arguments directed at punitive damages, were, as discussed above (pp.

20-30, supra), directed at: 1) debunking Merck’s trial positions (as discussed in the

preceding sub-points) that a verdict for the plaintiff would reduce the ability of

American doctors to prescribe the drugs of their choice, and that Fosamax was a good

drug which would not be available to patients if there were a plaintiff’s verdict; and

2) demonstrating Merck’s lack of credibility and underscoring its bias and motive in

denying the association between Fosamax and ONJ. In this case, the District Court

did not analyze or specifically address Douglas’ stated explanations in his Declaration

concerning why he acted in good faith in his summation.

Douglas’ lack of intent to inject punitive damages into the case was confirmed

by the expert Declaration submitted to the District Court by Richard Godosky, Esq.,

one of New York’s most respected trial attorneys. Godosky, who has no personal or

professional relationship with Douglas, concluded, with a reasonable degree of

professional certainty, that: 1) Douglas’ comments would reasonably have been

understood by the jury (and intended by Douglas) to have been directed not to the

issue of punitive damages, but, rather, to the issue of liability and made in response

to arguments by the defense; and 2) lawyers in the New York trial community would

34


not have believed that Douglas’ summation comments improperly injected the issue

of punitive damages into the trial.

Both with respect to Douglas’ credible and colorable explanation for his

summation comments, and Godosky’s supporting conclusions, the District Court did

not make contrary factual findings with a “high degree of specificity” – as is necessary

under the standards articulated by this Court in order to support the imposition of a

sanction.

ARGUMENT

THE SANCTION ORDER SHOULD BE REVERSEDBECAUSE THE DISTRICT COURT ABUSED ITSDISCRETION IN IMPOSING A SANCTION UPONDOUGLAS.

A. Introduction.

First, we wish to make it clear that the issue in this case is not whether the

District Court Judge below approved of Douglas’ style in trying cases. The court

described Douglas’ style as “aggressive and boisterous.” (SPA 95) Although Douglas

believes that a fairer description is that his style is “animated,” “interesting to the jury”

and times tinged with “drama” and “humor” (A 1066, 1075), those qualities are not

the issue in this appeal. Douglas is recognized nationally as an exceptionally17

Indeed, given what appeared to be the District Court’s dislike of Douglas’17

(continued...)

35


effective trial lawyer; he has never before been the subject of any sanctions

proceeding; and he is admired by both the plaintiffs’ bar and the defense bar.

Rather, the issue is whether the District Court’s intuitive guesses about the

supposed improper purpose of Douglas’ summation conduct can withstand this

Court’s review, which is “‘more exacting than under the ordinary abuse of discretion

standard’,” ATSI Communications, Inc. v. Shaar Fund, 579 F.3d 143, 150 (2d Cir.

2009) (quoting Perez v. Danbury Hosp., 347 F.3d 419, 423 [2d Cir. 2003]) – a

standard that required the District Court to make findings “supported by a high degree

of specificity in the factual findings.” Wolters Kluwer Financial Services, Inc. v.

(...continued)17

style, Douglas’ counsel sent the District Court two letters apologizing if Douglas’conduct in any way offended the court; and Douglas agreed to try no more Fosamaxcases before that court. (A 1109-16) Moreover, in his August 16 Declaration,th

Douglas cited various trial advocacy authorities which recognize that humor,aggressive questioning, drama and even sarcasm are important tools to the trulyeffective trial attorney. (A 1066-68) As noted earlier, Douglas never failed to followany directive by the court; and on only one occasion did the District Court ask thatDouglas change his behavior (to be less sarcastic in connection with his cross-examination of a single witness) – and Douglas complied with the District Court’srequest. See p. 29, n.16, supra. As this Court noted in the context of a claim that anattorney was improperly sanctioned for supposedly being overly-aggressive in theexamination of a trial witness, if a trial judge believes that a lawyer is actingimproperly, then “a district court should certainly put a stop to it.” Schlaifer Nance& Co., Inc. v. Estate of Warhol, 194 F.3d 323, 340 (2d Cir. 1999). In the case ofDouglas, his style of trying this case was not the subject of any discussion by theCourt until after the trial was over – except for one comment made by the DistrictCourt to Douglas’ co-counsel, and then Douglas heeded the court’s directive.

36


Scivantage, 564 F.3d 110, 113-14 (2d Cir. 2009). We submit that the District Court

did not satisfy this standard.

B. The Legal Principles Governing The District Court’s Order.

The District Court’s July 7 Order to Show Cause and its October 4 Sanctionth th

Order both clearly stated that any sanction would be imposed based upon the inherent

power of the court. (A 1010-13; SPA 82) The standard of review for a District

Court’s imposition of sanctions under its inherent powers and the substantive

standards governing the imposition of sanctions under those inherent powers are

firmly established in this Circuit: this Court reviews a district court’s decision to

impose sanctions for abuse of discretion. See, e.g., Enmon, supra, 675 F.3d at 143;

Gollomp v. Spitzer, 568 F.3d 355, 368 (2d Cir. 2009); Revson v. Cinque & Cinque,

P.C., 221 F.3d 71, 78 (2d Cir. 2000); Perry v. Ethan Allen, Inc., 115 F.3d 143, 154 (2d

Cir. 1997). As this Court noted in Revson, “a district court necessarily abuses its

discretion if its conclusions are based on erroneous legal determinations or on clearly

erroneous factual findings.” 221 F.3d at 78.

Moreover, a court abuses its discretion in imposing sanctions if it has “rendered

a decision that cannot be located within the range of permissible decisions.” Wolters

Kluwer, supra, 564 F.3d at 113. Although an abuse of discretion standard is usually

associated with a deferential standard of review, this Court has consistently held that

37


the abuse of discretion standard in the context of review of an order imposing

sanctions “is not as simple as it may appear at first blush.” Schlaifer Nance, supra,

194 F.3d at 333; see also Revson, supra, 221 F.3d at 78 (same); Mackler Productions,

Inc. v. Cohen, 225 F.3d 136, 141 (2d Cir. 2000) (same). This Court has maintained

that:

“although the district court may be better situated to marshalthe pertinent facts and ‘apply the fact-dependent legalstandards’ which govern the sanctions determination, wenevertheless need to ensure that any such decision is madewith restraint and discretion.”

Schlaifer Nance, supra, 194 F.3d at 334.

Indeed, this Court has recently re-iterated that, “‘[b]ecause of the potency of [a]

court’s inherent power, courts must take pains to exercise restraint and discretion

when exercising it.’” Truong v. Nguyen, 2012 U.S. App. LEXIS 23827, at *2 (2d Cir.

Nov. 20, 2012) (quoting, DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 136

[2d Cir. 1998]); see also Enmon, supra, 675 F.3d at 143; Raishevich v. Foster, 247

F.3d 337, 347 (2d Cir. 2001); Revson, supra, 221 F.3d at 78.

The reason for this more stringent standard of review for a sanctions

determination made by a district court is that “when the district court is ‘accuser, fact

finder and sentencing judge’ all in one, our review is ‘more exacting than under the

ordinary abuse-of-discretion standard.’” ATSI Communications, Inc. v. Shaar Fund,

38


579 F.3d 143, 150 (2d Cir. 2009) (quoting Perez v. Danbury Hosp., 347 F.3d 419, 423

[2d Cir. 2003]); see also Amaprop Limited v. Indiabulls Financial Services Limited,

2012 U.S. App. 10586, at *3-*4 (2d Cir. May 25, 2012) (in appeal of imposition of

inherent powers sanction, “careful review of the of the district court’s sanction order

is appropriate.”).

The substantive standards governing the imposition of sanctions under a court’s

inherent powers are equally clear. As this Court held in Revson, supra, “‘[t]o impose

sanctions under either [28 U.S.C. § 1927 or the court’s inherent powers], the trial court

must find clear evidence that: (1) the offending party’s claims were entirely meritless

and (2) the party acted for improper purposes.’” 221 F.3d at 79 (quoting, Agee v.

Paramount Communications, Inc., 114 F.3d 395, 398 [2d Cir. 1997]); see also Wilson

v. Citigroup, supra, 2012 U.S. App. LEXIS 26381, at *10-*11; Enmon, supra, 675

F.3d at 143; Schlaifer Nance, supra, 194 F.3d at 336. Indeed, this Court recently

vacated a district court’s imposition of inherent powers sanctions because the district

court, among other things, had not “identified the ‘clear evidence’ [that appellant had

acted with an improper] purpose.” Truong v. Nguyen, supra, 2012 U.S. App. LEXIS

23827, at *5.

This Court summarized these various standards in a single cogent statement of

the law in Wolters Kluwer, supra, explaining that:

39


“[In a sanctions proceeding where] the district court is‘accuser, fact finder and sentencing judge’ all in one... [aCircuit Court’s standard of] review is ‘more exacting thanu n d e r t h e o r d i n a r y a b u s e - o f - d i s c r e t i o nstandard....[I]nherent-power sanctions are appropriate onlyif there is clear evidence that the conduct at issue is (1)entirely without color and (2) motivated by improperpurposes ... Conduct is entirely without color when it lacksany legal or factual basis; it is colorable when it has somelegal and factual support, considered in light of thereasonable beliefs of the attorney whose conduct is atissue....A finding of bad faith, and a finding that conduct iswithout color or for an improper purpose, must be supportedby a high degree of specificity in the factual findings.”

Wolters Kluwer, supra, 564 F.3d at 113-14 (internal citations omitted); see also

Enmon, supra, 675 F.3d at 143-44; Advanced Magnetic Closures, Inc. v. Jaroslawicz,

607 F.3d 817, 833-34 (Fed. Cir. 2010) (applying Second Circuit standards); Revson,

supra, 221 F.3d at 78-79; Schlaifer Nance, supra, 194 F.3d at 336-37; Oliveri v.

Thompson, 803 F.2d 1265, 1272-73 (2d Cir. 1986).

With these principles in mind, we now discuss the District Court’s October 4th

Sanction Order.

40


C. The District Court’s Sanction Of Douglas Based Upon HisSummation Remarks Was An Abuse Of The District Court’sDiscretion Because The Sanction Was Not Based On ClearEvidence, Supported By A High Degree Of Specificity InFactual Findings, That Douglas’ Summation Remarks WereEntirely Without Color Or Motivated By An ImproperPurpose.

1. Introduction.

The Sanction Order imposed a sanction upon Douglas based upon various

portions of his summation remarks in the Boles v. Merck trial, which, according to the

District Court, “insidiously sought to inject [punitive damages] into the trial.” (SPA

89) The District Court’s sanction of Douglas based upon his summation remarks was

not based upon clear evidence, supported by a high degree of specificity in factual

findings, that Douglas’ summation remarks were entirely without color or motivated

by an improper purpose – and was an abuse of discretion. Nor was the sanction

imposed with discretion and restraint by the District Court.

First, with respect to Douglas’ summation remarks on Tr. 1664, 1674, 1678 and

1683-84 (A 430, 432, 433, 435), the Sanction Order did not address or acknowledge

Douglas’ proffered explanation of his good-faith, non-punitive damage, purpose for

those remarks. Moreover, the District Court’s erroneous conclusion that those remarks

must have related to punitive damages merely because they did not relate to

compensatory damages was unsupported by factual findings and was fundamentally

41


flawed, inasmuch as those remarks were clearly addressed to issues of liability and not

to damages – whether compensatory or punitive.

Second, with respect to Douglas’ summation remarks on Tr. 1704 (A 440), the

District Court’s conclusion that Douglas’ use of the words “reprehensible” and

“disgusting” had to imply an argument for punitive damages (SPA 91-92) was ipse

dixit and unsupported by any analysis or factual findings. In fact, those remarks by

Douglas were made in the context of highlighting Merck’s lack of credibility in

denying the causal association between Fosamax and ONJ – a key liability issue in the

case – and were unrelated to the issue of damages.

Third, with respect to Douglas’ summation remarks on Tr. 1710-11 (A 441-42),

the Sanction Order, again, failed to address or acknowledge Douglas’ proffered

explanation of those remarks in his Declaration concerning his good-faith, non-

punitive damage, purpose in his summation remarks. Moreover, the District Court’s

conclusion that inviting the jury to “say no” to Merck and to “say something” to

Merck with a plaintiff’s verdict in the case was “plainly tell[ing] the jury to make an

example of Merck” (SPA 92) was an ipse dixit conclusion, unsupported by any factual

findings, and was, we respectfully submit, inconsistent with fundamental principles

of tort liability and damages.

42


The discussion below demonstrates that the District Court’s sanction of Douglas

based upon his summation remarks did not meet the exacting standard of being based

upon clear evidence supported by a high degree of specificity in factual findings, and

being imposed with restraint and discretion, as required by this Court. Accordingly,

the District Court’s sanction of Douglas constituted an abuse of discretion, and should

be reversed.

2. With Respect To Douglas’ Summation Remarks On Tr.1663-64, 1674, 1678 And 1683-84, The Sanction OrderFailed To Address Or Acknowledge Douglas’ ProfferedExplanations Concerning His Good-Faith Purpose ForThose Remarks, And The District Court’s ConclusionThat Those Remarks Must Have Related To PunitiveDamages Merely Because They Did Not Relate toCompensatory Damages Was Fundamentally FlawedAnd Unsupported By Factual Findings.

With respect to Douglas’ summation remarks on Tr. 1663-64, 1674, 1678 and

1683-84 (A 430, 432, 433, 435), the Sanction Order did not address or acknowledge

the explanation proffered in Douglas’ August 16 Declaration concerning his good-th

faith, non-punitive damage, purpose for those remarks. Moreover, the District Court’s

unsupported conclusion that those remarks must have related to punitive damages

merely because they did not relate to compensatory damages was fundamentally

flawed, inasmuch as those remarks were clearly addressed to issues of liability and not

to damages – whether compensatory or punitive.

43


As described above, Douglas’ Declaration provided a detailed explanation of

his good-faith purposes with respect to his summation remarks cited by the District

Court in its Order to Show Cause. The Sanction Order quoted from the same portions

of Douglas’ summation that had been cited in the Order to Show Cause, but did not

address, analyze or make any factual findings with respect to Douglas’ explanations

of his summation remarks.

First, at pages 8 and 9 of its Sanction Order, the District Court simply quoted

from Douglas’ summation remarks at Tr. 1663-64 and 1674, and then stated: “What,

I ask rhetorically, do the passages quoted above have to do with compensatory

damages or pain or suffering?” (SPA 89-90) The court refused to address or even

acknowledge Douglas’ detailed explanation that these comments were directed at

highlighting, and debunking, Merck’s attempts to make the jury afraid of what would

happen to them personally, and to the medical industry generally, if there were a

plaintiff’s verdict. (A 1044-52; see pp. 24-26, supra [discussing Douglas’ explanation

of his comments at Tr. 1664 and 1674].)

Second, at pages 9 and 10 of its Sanction Order, the District Court quoted from

Douglas’ summation remarks at Tr. 1678 and 1683-84 and simply stated that: “[t]hese

arguments about selling ‘more pills’ have no relationship to compensatory damages.”

(SPA 90-91) Again, the District Court chose not to address or even acknowledge

44


Douglas’ detailed explanation that these comments were made in connection with

Douglas’ argument that Merck had a financial motive to claim that Fosamax was

beneficial for a patient group for which there was no evidence of a meaningful benefit,

and to deny the association between Fosamax and ONJ – an association that the

scientific and medical community had accepted for years. (A 1040-41; see pp. 27-28,

supra [discussing Douglas’ explanation of his comments at Tr. 1678 and 1683-84].)

After quoting (but not analyzing in any way) Douglas’ summation remarks on

Tr. 1663-64, 1674, 1678 and 1683-84 – the Sanction Order almost completely failed

to make any factual findings at all with respect to those remarks. Moreover, the

court’s conclusory statements that the summation remarks quoted on pages 8 through

10 of the Sanction Order were not related to compensatory damages not only reflected

the District Court’s failure to address Douglas’ explanations for his comments – they

also reflected a fundamental flaw in the District Court’s unfairly truncated analysis.

The District Court apparently concluded that Douglas’ summation remarks must have

been directed to punitive damages simply because they were not directed to

compensatory damages. In fact, Douglas remarks were properly directed to issues of

liability – and not to issues of damages, whether compensatory or punitive.

In particular, as reflected in Douglas’ explanation in his Declaration, as

discussed above, his summation remarks were directed to liability issues, including:

45


1) the lack of benefit of Fosamax to plaintiff’s group of patients (which was relevant

to the key liability issue of whether Fosamax was “unreasonably dangerous”); 2)

Merck’s lack of credibility in claiming that Fosamax was beneficial to the group of

patients similar to plaintiff because of, among other things, Merck’s financial

motivation to “sell more pills”; 3) Merck’s lack of credibility in denying the causal

connection between Fosamax and ONJ (another key liability issue) because of

Merck’s financial motive to “sell more pills”; and 4) Merck’s attempt to dissuade the

jury from holding Merck liable with its illogical and false “fear” argument.

For example, the Sanction Order quotes at length from Douglas’ summation at

Tr. 1663-64:

“Even, heck, Dr. De Papp told you, and I’m going to showyou her [sic] transcript of her trial testimony that she gavea couple of days ago, even she said unwittingly, becauseyou know, folks, one thing you can’t run from and one thingyou can’t hide from at the end of the day is the truth, notmatter how you want to pool the data, no matter how youwant to spin things to the FDA, no matter how you want tospend money on organizations to define criteria fortreatment as low as possible so you can sell more pills, andthat’s what’s going on here. Let’s give Fosamax toeveryone in the world. And I’m not surprised. Is anybodyhere surprised that that’s the position of Merck? That it’sa wonderful drug? They sell it for a profit. They sell thosepills, and it is clearly, especially what we learned yesterday,their goal, and I’m going to talk about that, their goal is tosell more pills. To convince folks like Mrs. Boles, toconvince folks that they should be frightened that unless

46


you take this pill you’re going to die, because 30 percent ofpeople who have hip fractures end up dead. We heard thatfrom Dr. Bilezikian who came here to tell you all the scarydetails. Whoo, everybody better get on Fosamax today.”

(A 430; see SPA 89-90.)

A simple analysis of the statements contained in this passage – as opposed to

the District Court’s rhetorical conclusion – demonstrates that Douglas’ arguments

were not aimed at issues of damages at all, whether compensatory or punitive. Rather,

this passage reflects Douglas’ liability-related arguments that:

• Even the defense’s own witness, Dr. De Papp, had acknowledgedthat there was no evidence that Fosamax had any benefit toplaintiff’s patient group (A 430);

• Merck’s position that Fosamax supposedly benefitted plaintiff’spatient group was not surprising in light of Merck’s financialmotive to sell more pills (A 430); and

• The testimony of another defense witness, Dr. Bilezikian (who wasalso on Merck’s payroll in connection with giving talks at industryevents), concerning the risks of osteoporosis, was consistent withMerck’s motivation to sell more pills by inducing fear and makingpeople believe that they need Fosamax (A 430).

Similarly, the Sanction Order quotes from Douglas’ summation remarks at Tr.

1678:

“Dr. Marx [a plaintiff’s witness who had previously in hiscareer taken the position that Fosamax did not cause ONJ]has been living like a crusader, in the best sense of theword, to get the word out against the powerful – let me say

47


that again – against a company like Merck who is like themembers of the Flat Earth Society. The Flat Earth Society,who doesn’t want the world to know that the world is round. Do you know what the flat earth society is? Why? Why? Because they want to sell more pills. If people find out theearth is round, we’ll be in a whole lot of trouble. We wantto sell those pills to people who have ostopenia, 2.0 to 2.5.”

(A 433; see SPA 90.)

These remarks were clearly directed at the key liability issue of the causal

association between Fosamax and ONJ – and at highlighting to the jury that Merck’s

solitary refusal to acknowledge the causal relationship between Fosamax and ONJ was

the result of its financial motive to “sell more pills,” and was not credible.

The District Court made no effort to perform even a cursory analysis of the

obvious intent of Douglas’ words, and the District Court’s statement that these

comments did not relate to compensatory damages was, frankly, a non-sequiter.

Certainly, the mere statement that Douglas’ summation comments do not relate to

compensatory damages does not meet the standard of clear evidence of improper

purpose, supported by highly specific factual findings – as required to impose

sanctions under Wolters Kluwer, supra, and other decisions by this Court.

Indeed, the non-punitive damage purpose of Douglas’ summation remarks was

confirmed by Godosky’s expert Declaration, in which Godosky, as discussed above

(pp. 31-32, supra), concluded with a reasonable degree of professional certainty that:

48


1) Douglas’ comments would reasonably have been understood by the jury (and

intended by Douglas) to have been directed not to the issue of punitive damages, but,

rather, to the issue of liability and made in response to arguments by the defense; and

2) lawyers in the New York trial community would not have believed that Douglas’

summation comments improperly injected the issue of punitive damages into the trial.

Godosky noted:

“There is not a single request or intimation by Mr. Douglasthat he was seeking punitive damages, but rather, Mr.Douglas was asking the jury to hold the defendantresponsible in this case and perhaps protect futureconsumers of Fosamax.”

(A 1126)18

Further reflective of the District Court’s lack of careful and fair analysis of18

Douglas’ explanation of his summation comments, was the court’s statement thatDouglas’ defense, and the position taken by his counsel and by Godosky, was basedupon a lack of notice. (SPA 93-94) That was never the position taken in Douglas’Declaration in his discussion of Point 5; nor was it the position of Godosky’s expertDeclaration in its discussion of Point 5.

The citations in the Sanction Order (SPA 93) to pages 4 and 25 of the transcriptof the September 9, 2010 oral argument on the Order to Show Cause do not supportthe District Court’s position. At page 4 of the September 9 transcript, Douglas’th

counsel merely argued that one of the key issues in any attorney-disciplinary case waswhether an attorney acted with “bad scienter.” (A 1159) At page 25 of theSeptember 9 transcript (A 1180), the only reference made by Douglas’ counsel to theth

issue of notice related to Douglas’ counsel’s argument that the District Court nevertold Douglas to stop doing anything that the Court found offensive. That commentby Douglas’ counsel at page 25 of the September 9 transcript was, in fact, notth

(continued...)

49


In sum, the District Court failed to analyze or consider Douglas’ proffered

explanation in his August 16 Declaration, as described above, concerning his good-th

faith, non-punitive damage, purpose in his summation remarks on Tr. 1663-64, 1674,

1678 and 1683-84. Moreover, the District Court’s conclusion that Douglas’

summation remarks must have been directed to punitive damages simply because they

were not directed to compensatory damages was fundamentally flawed, because

Douglas’ remarks were properly directed to issues of liability – and not to issues of

damages, whether compensatory or punitive.

3. With Respect To Douglas’ Summation Remarks On Tr.1704, The District Court’s Erroneous Conclusion ThatDouglas’ Use Of The Words “Reprehensible” And“Disgusting” Must Have Been Asking The Jury ForPunitive Damages Was An Ipse Dixit Conclusion WhichWas Unsupported By Any Analysis Or Factual Findings.

At page 10 of its Sanction Order, the District Court quoted from Douglas’

summation remarks on Tr. 1704 (A 440), and simply asserted that Douglas’

description of Merck’s conduct as “reprehensible” and “disgusting” had to imply an

argument for punitive damages. (SPA 91-92) The District Court’s conclusion that

Douglas’ summation remarks on Tr. 1704 related to punitive damages was an ipse

(...continued)18

addressed to punitive damages. Similarly, Godosky never made any mention in hisexpert Declaration to lack of notice in connection with his conclusions with respectto Point 5.

50


dixit conclusion which was unsupported by any analysis or factual findings. In fact,

those remarks by Douglas were made in the context of highlighting Merck’s lack of

credibility in denying the causal association between Fosamax and ONJ (including

Merck blaming people injured by Fosamax for their poor dental health and hygiene,

and for waiting too long to seek medical assistance) – a key liability issue – and were

unrelated to the issue of damages.

At various points in his summation, Douglas properly highlighted to the jury

certain inconsistent (and hypocritical) defense positions in order to underscore

Merck’s lack of credibility in denying the key issues of liability in the case. (See, e.g.,

A 434-35, 440-41.) In particular, Merck’s trial position was that Fosamax was

beneficial to plaintiff’s group of patients – while the evidence in the case suggested

that, in fact, Merck was aware that Fosamax did not benefit plaintiff’s group of

patients, but had “pooled” trial results submitted to the FDA in order to mask this lack

of benefit and obtain approval to market Fosamax to patients who did not need it.

(See, e.g., A 430-31, 434-35, 438-39.) Likewise, Merck denied the causal association

between Fosamax and ONJ (and plaintiff’s injuries) – while the evidence showed that,

in fact, Merck was aware of the association between Fosamax and ONJ, but chose not

to perform safety studies concerning the association. (See, e.g., A 433, 437, 438.) At

51


the same time, Merck attempted to portray itself to the jury as being genuinely

concerned for the safety of the users of its products. (A 434, 436)

Douglas’ summation remarks on Tr. 1704 (A 440) were part of Douglas’

marshaling of evidence that demonstrated the causal association between Fosamax and

ONJ. (A 439) In particular, the remarks quoted on page 11 of the Sanction Order

(SPA 92) related to a confidential internal Merck email that commented, with a

mocking tone, on the large portion of the American population that does not practice

adequate dental hygiene – which, as Douglas pointed out to the jury, Merck was

concerned about precisely because Merck was aware that Fosamax users with poor

oral hygiene were at greater risk for developing ONJ. (A 440)

These summation remarks, and other similar summation remarks by Douglas

concerning Merck’s internal communications, were part of his argument that because

Merck’s internal communications recognized the causal association between Fosamax

and ONJ, the defense’s denial of that association in the trial was not credible. (See A

437 [“Second [question for the jury], Fosamax causes ONJ. ... Merck’s own

confidential memos. We’re going to look at them in a couple of minutes. You’ll see

they admit it [causes] ONJ.”]; A 440 [“[Defense counsel] came here and told you for

the better part of two weeks, its not true [that Fosamax causes ONJ]. But that’s not

52


what it says here in this email. ... They know it internally. Yet for your benefit in the

court for the last two weeks they say its not true.”].)

While Douglas’ statement of moral outrage at Merck’s hypocritical arguments

may have been emotional and vigorously stated, there was no factual or legal basis for

the District Court to have made the completely ipse dixit finding that it “is not calling

for anything but punitive damages.” (SPA 92) Saying that Merck was disgusting in

its false and hypocritical arguments – in the context of arguing that Merck’s denial of

causation was not credible – is not asking the jury for punitive damages, and the

District Court provided no specific finding to support such a conclusion.

4. With Respect To Douglas’ Summation Remarks On Tr.1710-11 Relating To Saying “No” To Merck, TheSanction Order Again Failed To Address OrAcknowledge Douglas’ Proffered ExplanationsConcerning His Good-Faith Purpose For ThoseRemarks, And The District Court’s Conclusion ThatThose Remarks Must Have Been Directed To PunitiveDamages Was An Ipse Dixit Conclusion Which Was Unsupported By Factual Findings.

At page 11 of its Sanction Order, the District Court quoted from Douglas’

summation remarks on Tr. 1710-11 (A 441-42), and simply asserted that Douglas’

summation remarks addressed to saying “no” to Merck and “say[ing] something” to

Merck were “plainly tell[ing] the jury to make an example of Merck.” (SPA 92) The

Sanction Order, again, failed to address or acknowledge Douglas’ proffered

53


explanation in his Declaration concerning his good-faith, non-punitive damage,

purpose in those summation remarks; and the District Court’s conclusion that those

remarks were “plainly tell[ing] the jury to make an example of Merck” was ipse dixit,

unsupported by any factual findings, and was, we respectfully submit, inconsistent

with fundamental principles of tort liability and damages.

First, the Sanction Order failed to address or acknowledge Douglas’ explanation

(in the context of explaining his similar remarks on Tr. 1683-84 [A 435]) of his good-

faith, non-punitive damage purpose in asking the jury to say “no” to Merck. Douglas

explained in his Declaration that asking the jury to say “no” was not asking to jury to

punish Merck – but rather, simply asking the jury to reject Merck’s biased, non-

credible arguments in the case. (A 1049-50; see pp. 28-30, supra [discussing Douglas’

explanation of his comments at Tr. 1710-11].)

Douglas’ remarks at Tr. 1710-11 – which represent the second and third-to-last

pages of Douglas’ fifty (50) transcript page summation – repeated the plaintiff’s theme

that the jury should reject Merck’s biased and non-credible position that plaintiff’s

injuries were not caused by Fosamax. (A 441-42) Douglas’ remarks on Tr. 1710-11

that a plaintiff’s verdict would “give [plaintiff] a little justice, [and] say something to

Merck, that it stops here,” and that the jury had the power to say “no” to Merck with

its verdict, simply asked the jury, again, to reject Merck’s non-credible and biased

54


arguments – and did not, as the District Court asserted in its Opinion, “plainly tell the

jury to make an example of Merck.” (See A 1051-52; SPA 92.)

Second, Douglas’ statement about “saying something” to Merck reflects the

reality that a jury verdict holding Merck liable for plaintiff’s injuries would have the

potential to impact Merck’s marketing of Fosamax in the future – even without

punitive damages being involved. A plaintiff’s verdict in Boles v. Merck would

involve findings by the jury, among other things: that Fosamax was “unreasonably

dangerous” and had no fracture reduction benefit to women, such as plaintiff Boles,

who have bone density T-scores between -2.0 and -2.5 (and, in any event, only a

limited period of fracture-reduction benefit even for other groups of patients) (see SPA

102, 105, 107-09, 115-16, 118; A 437); and that Fosamax causes ONJ (see SPA 110-

14; A 437). Clearly, such a verdict would be likely to have a deterrent impact on

Merck’s marketing of Fosamax to women in plaintiff’s group of patients in the future

– even without a finding by the jury that Merck’s conduct had warranted punitive

damages. The District Court’s view that a verdict would only “say something” to

Merck if it involved punitive damages is simply unsupportable – and was, in fact,

unsupported by any analysis or factual findings by the District Court. 19

See, e.g., Gerald F. Tietz, Strict Products Liability, Design Defects and19

Corporate Decision-Making: Greater Deterrence Through Stricter Process, 38 VILL.(continued...)

55


As Douglas commented in his summation, Boles v. Merck was about justice for

plaintiff Boles – but, if there was a goal beyond justice for the plaintiff, it was to

protect women from taking drugs that they do not need. (A 436) Boles’ claims

required the jury to find, in essence, that Merck had been selling a drug to a population

of women who would derive no benefit from the drug, and to whom the drug presented

an unreasonable risk of harm.

Even without an additional finding that Merck had acted in a manner that

warranted punitive damages, a plaintiff’s verdict holding Merck liable for plaintiff’s

injuries would send a clear “message” to Merck that continuing to sell Fosamax to

plaintiff’s group of patients involved a very real economic risk of future liability in

similar cases. Indeed, the defense’s “choice” argument in Boles v. Merck (pp. 20-21,

supra) was based upon the reality that a plaintiff’s verdict would have the effect of

limiting the ability of doctors to prescribe Fosamax to certain patients.

Third, Douglas’ statement that the jury had the power to say “no” to Merck with

its verdict (A 442) was preceded by his similar argument that the jury should say to

Merck that “it stops here” – an argument that was the subject of an overruled objection

by the defense:

(...continued)19

L. REV. 1361, 1418 (1993) (empirical data supports the argument that product liabilitylaw contributes both directly and indirectly to product safety).

56


“[Douglas:] ... [W]e ask you to give [plaintiff] a littlejustice, to say something to Merck, that it stops here.

We’re not taking the choice away. We’re just saying don’tgive medication to women that shouldn’t be on it.

[Defense Counsel]: Objection, your Honor. It’scompensatory only.

The Court: Objection overruled.”


The District Court’s flat overruling of defense counsel’s objection (A 441) gave

Douglas no hint whatsoever that he had done anything wrong or argued punitive

damages improperly. Only later, after Douglas had concluded his summation, did the

District Court announce that it viewed this argument by Douglas as improper. (A 442;

SPA 92) In light of the flat overruling of the objection by the District Court, Douglas,

and any reasonable lawyer in his place, would have believed that his later comment

that the jury had the power to say “no” to Merck with its verdict was proper.

Finally, Douglas’ lack of intent to inject punitive damages into the case was

confirmed by the expert Declaration submitted to the District Court by Richard

Godosky, Esq. Godosky, who has no connection with Douglas whatsoever, concluded

with a reasonable degree of professional certainty that: 1) Douglas’ comments would

reasonably have been understood by the jury (and intended by Douglas) to have been

57


directed not to the issue of punitive damages, but, rather, to the issue of liability and

made in response to arguments by the defense; and 2) lawyers in the New York trial

community would not have believed that Douglas’ summation comments improperly

injected the issue of punitive damages into the trial. (A 1126)

The District Court did not deny the impeccable credentials and credibility of

Godosky, but chose only to respond to Godosky’s analysis by, again, stating the ipse

dixit conclusion that:

“[Douglas] knew full well, as an experienced trial attorney,that he was way off limits. To urge otherwise, as [Douglas’counsel] argues, and Mr. Godosky seeks to do in hisdeclaration, (Godosky DECL. ¶ 25), does not conform toreality.”

(SPA 93-94)

The District Court made no attempt to explain why, in its view, Godosky’s

expert opinion “does not conform to reality.” The District Court’s analysis is

perplexing insofar as the court obviously concluded that the issue of whether Douglas

improperly injecting the issue of punitive damages into the trial was the most

important issue relating to the Order to Show Cause, since this issue was the only

grounds on which the court ultimately sanctioned Douglas. Yet, once again, the court

only offered an ipse dixit conclusion which was no substitute for the required “high

degree of specificity in the factual findings.”

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In sum, the District Court’s conclusion that Douglas’ summation remarks

addressed to saying “no” to Merck and “sending a message” to Merck must have been

directed to punitive damages ignored Douglas’ proffered and credible explanation for

his comments, and was an ipse dixit conclusion unsupported by any analysis or factual

findings.

5. Conclusion.

As demonstrated above, the District Court did not, under this Court’s articulated

standards in Wolters Kluwer make findings that Douglas acted without color or an

improper purpose supported by “a high degree of specificity in the factual findings.”

Nor, as this Court required in Schlaifer Nance, did the District Court act with “restraint

and discretion” in imposing a sanction upon Douglas. Accordingly, the District

Court’s sanction of Douglas was an abuse of discretion, and should be reversed.

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D. Although This Is An Appeal Of A Sanction, The ConsequencesOf The Sanction Reach Far Beyond The $2,500 Sanction Itself.

Although the $2,500 monetary sanction imposed upon Douglas is clearly a

serious matter, the fact that the District Court found that Douglas had acted in bad

faith is, as a practical matter, far more serious, because it threatens Douglas’ ability to

pursue his career in the future. As noted above (p. 10, supra), Douglas’ practice

focuses on large, multi-state mass tort and products liability cases across the nation.

(A 1020-21) These cases are conducted all over the country, and Douglas is required

to seek admission pro hac vice in matters litigated outside of New York State. This

court has noted that “behavior before other courts provide[s] ample grounds to

scrutinize [an] application for pro hac vice admission,” Martens v. Thomann, 273 F.3d

159, 175 (2d Cir. 2001) (citation omitted), and courts have frequently denied

attorneys’ applications for pro hac vice admission because of sanctions or discipline

against the attorney in prior proceedings. See, e.g., United States v. Ensign, 491 F.3d

1109, 1115 (9th Cir. 2007); Comuso v. National Railroad Passenger Corp., 267 F.3d

331, 338 (3d Cir. 2001).

For the rest of Douglas’ career, as he travels across this country and seeks pro

hac vice admission, such admission, and his ability to represent his clients, will be

imperiled because courts will be free to deny him pro hac vice admission based upon

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the finding of intentional misconduct and the sanction imposed on him in this case by

the District Court below.

Thus, although the $2,500 monetary sanction imposed upon Douglas is clearly

a serious matter, the consequences of this case will have life-long consequences for

Douglas.

CONCLUSION

For all of the foregoing reasons, the October 4, 2010 Opinion and Order of the

District Court imposing sanctions on Douglas based upon Point 5 of the July 7, 2010

Order to Show Cause should be reversed.

Dated: New York, New York August 6, 2013

Respectfully submitted,

/s/ Michael S. Ross Michael S. RossLAW OFFICES OF MICHAEL S. ROSS60 East 42 Streetnd

47 Floorth

New York, New York 10165(212) 505-4060


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CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitations of Fed. R. App. P.

32(a)(7)(B) because this brief contains 13,890 words, excluding the parts of the brief

exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief

has been prepared in a proportionally spaced typeface using WordPerfect 15 in a 14-

point Times New Roman font for the text and footnotes.

Dated: New York, New YorkAugust 6, 2013

LAW OFFICES OF MICHAEL S. ROSS

By: /s/ Michael S. Ross Michael S. Ross60 East 42 Streetnd

47 Floorth

New York, New York 10165(212) 505-4060



Documents

12-4208-cv Lnylawyer.nylj.com/adgifs/decisions14/102214douglas.pdf · Since the District Court has entered a final Judgment in the underlying litigation, this Court has jurisdiction